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COFFEE consumption has taken over the classic Aussie cup of tea as Australia's most consumed hot drink, research by BIS Foodservice revealed on Wednesday.

The survey of more than 1200 Australians showed the average person over the age of 14 has increased their coffee consumption by nearly 20% since 2010.

But, in an effort to save some of the money spent on their skim, non-fat de-caffeinated caramel lattes, Australians are drinking more tap water.

BIS Foodservice head Sissel Rosengren said the increase in coffees bought had risen despite a price rise for the drink at the same time.

"Coffee is now the at-home beverage of choice for Australians, replacing tea for the first time," she said.

"This has been driven largely by the significant fall in cost of making an espresso-based coffee at home, combined with a maturing coffee palette.

"In addition, coffee is now the number one hot beverage across all age and socioeconomic groups."

The research also looked at the national market, showing the total number of coffee "units" bought in 2010 was 1.8 billion, growing to 2.1 billion in 2012.

The rise was despite a sharp increase in the cost in the past two years, with an average coffee rising from $3.62 to $3.86.

"The away-from-home coffee market is expected to grow between 10% and 15% within the next two years, driven very much by the younger generation, while coffee consumed in the workplace - both made at work and outside the workplace - is also expected to rise," says Rosengren.

"The signs are there that Australia is becoming a coffee nation.

"Pod machines are very likely to increase at home and at work, while by 2020 we fully expect the espresso-based coffee to overtake the instant/soluble variety."